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Brexit: the mechanics of leaving the European Union

What procedures are in place if the UK votes to leave the EU and how might its relationship look afterwards?

THE LEGAL PROCESS

The legal procedure for leaving the EU is set out in Article 50 of the Treaty on European Union (TEU). A member state may decide to withdraw from the Union in accordance with its own constitutional requirements. If the UK votes to leave the EU, it is expected that the British government will notify the European Council of its intention to leave before beginning exit negotiations. Any agreement reached will set out the arrangements for withdrawal and be subject to a qualified majority vote in the European Council.

European law would cease to apply in the UK from the date of entry into force of the withdrawal agreement or, where no agreement is reached, two years after the UK notifies the European Council of its intention to leave. The European Council could, in agreement with the UK, unanimously decide to extend this period. However, this requirement for unanimity gives the remaining EU member states significant bargaining power against the UK in negotiations on the terms of exit. The complexity behind the exit negotiations that would have to take place mean that the chance of an acceptable deal for all parties after just two years is slim.

The principle of parliamentary sovereignty in the UK would also dictate that the European Communities Act 1972 be repealed upon Brexit, though it is very unlikely that all laws rooted in EU legislation will be abandoned immediately.

POST EXIT OPTIONS

Any negotiated agreement between the UK and EU would have to take account of the framework for its future relationship. On 2 March 2016 the UK government published a report outlining the possible alternative models for the United Kingdom outside the European Union. Based on the pattern of existing relationships between the EU and third countries there are three main alternative models:

The Norway model (EEA but no EU)

The UK could leave the EU, re-join the European Economic Area (‘EEA’) and have a relationship with the EU similar to Norway, Iceland and Liechtenstein. To re-join the EEA, the UK would also be legally required to join the European Free Trade Association (‘EFTA’). Re-joining both organisations would require the UK to meet each group’s membership terms and gain the approval of existing members. Of the existing alternative models this one is most closely integrated with the EU. Under this model the UK would have considerable access to the EU market, but would continue to be bound by EU laws concerning the internal market, such as those covering employment, competition and free movement.

A negotiated bilateral agreement

The UK could opt to re-join the EFTA (and not the EEA) and enter into bilateral trade agreements as Switzerland has done, giving it partial access to the single market, including tariff-free trade.

The UK could also enter a customs union with the EU as Turkey has done, granting access to the single market for goods, in return for the imposition of EU rules in areas where it has access to the internal market, including competition and product rules. Alternatively, a solution similar to the Canadian Free Trade Agreement would provide for a more detached relationship with the EU. It took more than seven years to negotiate though and only provides limited access to the European market in return for some significant concessions on export rules.

No existing bilateral trade agreement would deliver the same level of access that the UK currently enjoys to the EU single market and the UK would lose the benefit of EU Free Trade Agreements with other parts of the world, which could take years to renegotiate. Those in favour of leaving the EU, however, argue that as the fifth largest economy in the world, the UK is well placed to negotiate a unique bilateral agreement, retaining access to the single market without some of the more burdensome obligations imposed under EU law.

World Trade Organisation (‘WTO’) membership

If the UK could not negotiate a withdrawal agreement with the EU and failed to secure the unanimous support of all member states for an extension of the two year notice period, it would be forced to revert to a WTO-only relationship. The UK would no longer be subject to any EU laws and the UK’s goods and products would be subject to EU common external tariffs.

CONCLUSION

The preferred alternative model for Brexit campaigners is not yet clear. This, combined with the UK government’s pro-EU stance, provides significant uncertainty as to how the UK’s relationship with the EU might look if it votes to leave. The fierce political debate between the two sides means that clarity on this is unlikely until after the referendum outcome is known.

If the UK votes to leave the EU it will almost certainly try to adopt a framework that provides access to the EU single market. Much will depend on the EU’s willingness to exclude the UK from traditional obligations in return for participation in the single market. The UK’s position as a net importer of goods from other EU countries may strengthen its bargaining power in achieving this goal.

It has also been suggested that a second referendum may be called if the EU is willing to make further concessions to the UK for it to remain in the EU. Article 50 TEU offers no mechanism for withdrawing a notification of intent to leave, which makes this scenario unlikely, unless an alternative political solution is found.

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